Understanding China’s multiple roles in Africa

Jian-Ye Wang, of the African Department of the IMF, focused his intervention in the 6th Brussels Development Briefing on changing Africa-China economic relations and African development.

Pointing out that China-Africa cooperation is not new and already goes back 30 years, Mr. Wang noted that the label “new” donor is misleading as China is not primarily an aid donor in the traditional sense. Talking in these terms might let us miss the real point – that private capital flows are overtaking ODA in Africa.

For Mr. Wang it is important to understand this concept and recognise China’s multiple roles, as a market for Africa’s exports, as financier and investor, and as contractor and constructor. Economic relations between China and Africa are now primarily commercial rather than aid-driven. China’s private sector plays a significant role in Africa meaning that cooperation takes many forms, it is decentralised and broad-based.

Mr. Wang further argued that changes in the China-Africa relationship are a reflection of structural changes in the world economy: Past debtors are today’s creditors and vice versa. Over the seven years to March 2008, global foreign currency reserves jumped (mostly in emerging and oil exporting countries) by US$4.9 trillion, with China’s reserves alone up US$1.5 trillion. As a result, China has become a more significant supplier of capital than even the USA. He concluded that China’s engagement in Africa is a logical consequence of this growth.

In addition, China has experiences than can be relevant for Africa, particularly in terms of rural development. Wang pointed to China’s rising productivity in the agriculture sector, which has not only enabled China to feed about 20 percent of the world’s population with some 7 percent of the world’s arable land, but also facilitated industrialization and further economic reform. China’s reform started with agriculture, not with “charity”, and demonstrates that growth is the most effective way out of poverty, for lasting poverty reduction.

However, according to Mr. Wang, while African countries can learn important lessons from China’s experience, they need to determine their own development strategy. “It’s each country that has to be in charge, so they can learn instead of copying, and develop strategies that fits the local conditions.”

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